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Sallie Mae Deal Computes

For J.P. Morgan Chase
And Bank of America,
Big Buyout Makes Sense

Updated April 17, 2007 12:01 a.m. ET

Bank of America and J.P. Morgan Chase aren't normally among the Who's Who of private-equity investing. So it's a bit surprising to see the two banks stumping up a giant $4.4 billion stake -- or half the equity -- in the $25 billion leveraged buyout of SLM, or Sallie Mae. But the deal actually makes a lot of sense for them. In return for their investment in the student lender and for providing a $200 billion secured backup line of credit, they stand to get a lock on Sallie Mae's lucrative capital-markets business, which packages and sells its student loans to big institutional investors. That could be worth more than $800...